USDA estimates the total 2012 corn crop to be 10.780 billion bushels. In 20122, the corn crop was 12.358 billion bushels. USDA's national average corn yield came in at 123.4 bu. per acre, compared to 122.3 bu. per acre estimate in November. Corn harvested acres were estimated down 346,000 from November, which was more than offset by the increase in yield.

Jerry Gulke, president of the Gulke Group, says the information released in the reports should provide some support for the corn market. "USDA lowered harvested acres and increased production. But, the kicker was we dropped carryover. We produced more, but will have less left over going into next year."

USDA increased corn feed and residual use 300 million bushels from December, to 4.45 billion bushels. Gulke says this increase could be credited to livestock producers locking in feed prices early in 2012. "Maybe they loaded up when they saw the dry weather coming earlier this year."

Gulke says the updates USDA provided on Friday should lead to some exciting times in the corn markets. "I don’t know how high it will go," he says. "What I do know, when you’re given a financial report like this, corn shouldn’t close below today’s lows going forward.

For soybeans, USDA increased 2012 production to 3.015 billion bushels, up 44 million bushels from the November estimate. It pegged the national average bean yield at 39.6, up 0.3 bu. from the November estimate.

Gulke says the bean market was down hard, following the reports. "Really, there is no good or bad news in beans. Now we’ll start to focus on Brazil production."

As for wheat, USDA estimates 41.8 million acres of all wheat has been seeded, which is up 1% from 2012. Gulke says the trade was expecting to see a much higher amount of wheat in the ground, which could have some looming implications.

"We’ve got a crop that not only went into dormancy in poorer condition than you wanted to see, but you also have less acres than expected. That would imply the guys in wheat country are going to plant more corn or beans."